Does Piracy Hinder Innovation?

Many opponents to piracy believe that piracy hinders innovation. The thought is that if “ﬁrms know that their products will be pirated, they have no incentive to innovate. For ﬁrms piracy means indeed that they won’t get any “reward” for their innovation, and that as they are experiencing a smaller amount of sales, their revenues won’t cover the R&D expenses.” (Rayna, 2004) There is no doubt that piracy, in all forms, “has increased over the past years, [yet] the ﬁrms producing digital goods remain highly innovative. What’s more [these] types of ﬁrms certainly stand among the most innovative ﬁrms. For example, Microsoft, despite piracy, keeps releasing new software.” (Rayna, 2004)